Investing in retail - shoplots or shophouses?

RIDING OUT THE STORM PITFALLS TO AVOID Investing in retail - shoplots or shophouses? Allan Soo

Outlook - economy Outlook - retail and office market How to choose a location Growth trends Infrastructure development Shophouses and shoplots in Greater KL Comparative trends Hotspots

Outlook - economy Outlook - retail and office market

Oversupply of malls Source: Savills Research

Retail Space (million sq ft) Greater KL retail space expected to exceed 60 million sq ft by end-2017 Cumulative Retail Supply in the Greater KL 70.00 Selangor KL Suburbs KL City 60.00 50.00 35.08 35.48 40.00 30.56 32.67 32.78 24.94 26.78 27.24 30.00 16.46 17.20 19.07 20.12 20.78 21.59 23.09 20.00 7.31 7.97 8.25 7.02 7.91 8.36 8.70 10.15 10.57 10.67 11.53 13.74 13.74 11.98 13.06 10.00 9.06 9.06 9.06 10.54 10.54 10.54 10.54 10.98 10.98 11.06 11.83 11.81 11.81 12.89 13.00 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e 2018e Source: Savills Research

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 2016e 2017e 2018e 36.2 36.6 36.6 36.9 38.9 39.6 41.0 44.1 43.1 43.5 45.5 45.6 46.5 46.5 47.2 Office Space (million sq ft) 15.3 16.6 18.3 19.4 22.2 23.6 13.2 25.3 13.8 15.2 26.2 29.7 16.3 31.4 31.8 31.5 35.6 36.0 20.4 37.3 22.9 24.7 27.1 28.9 30.0 32.7 33.2 36.7 38.2 39.6 Office Space in Greater KL reached 110 million sf 8.67 million sf expected to be completed by 2016 140 Selangor KL suburban KL City Growth rate 14% 120 12% 12% 100 80 60 5% 6% 6% 7% 5% 8% 10% 8% 6% Annual supply growth (%) 40 4% 5% 4% 4% 3% 3% 4% 20 2% 0 0.2% 2% 0%

6 5 4 3 2 1 0

Understand market trends location where is demand coming from survey neighbourhood ratio of shops to houses new township what are developers plans? Activity generator or critical mass? Pricing and rents

POPULATION KL & Selangor: 7.73 million residents 4.0% growth One of the youngest populations in Asia Malaysia: 27.7 Singapore: 39.3 Thailand: 36.2 Indonesia: 29.2 Hong Kong: 43.2 Japan: 46.1 Source: Department of Statistics (DOS) and Central Intelligence Agency (CIA)

Population Population Population Growth Trends Malaysia - 2.60% p.a. between 1980 and 2010. Greater KL - 3.81% p.a. between 1980 and 2010. 30,000,000 Population of Malaysia 28,334,135 8,000,000 Population of Greater KL 7,136,762 25,000,000 20,000,000 17,566,982 22,198,276 6,000,000 5,258,609 15,000,000 13,136,109 4,000,000 3,434,311 10,000,000 2,345,860 2,000,000 5,000,000 0 1980 1991 2000 2010 Year 0 1980 1991 2000 2010 Year Source: Population and Housing Census, Department of Statistics

Draft Kuala Lumpur City Plan 2020 Distribution of Residential Zones, 2020 Source: Draft Kuala Lumpur City Plan 2020

Draft Kuala Lumpur City Plan 2020 Distribution of Commercial & Mixed Use Zones, 2020 Source: Draft Kuala Lumpur City Plan 2020

5,730 11,501 68,361 100,100 177,877 410,491 864,451 1,138,198 1,334,070 360,056 633,144 1,184,180 1,765,495 1,999,860 166,059 352,906 537,525 668,694 884,000 919,610 1,145,342 1,305,792 1,588,750 46,025 54,653 57,336 207,354 363,780 Population Growth by District 1 2,000,000 1,500,000 Population of WP Kuala Lumpur : 1.84% 5 4 400,000 300,000 200,000 Population of Sepang District : 5.15% 1,000,000 500,000 100,000 2 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1980 1991 2000 2010 Population of Petaling District : 5.44% 2 1 6 5 0 1,000,000 800,000 600,000 400,000 200,000 1980 1991 2000 2010 2020f Population of Gombak District : 4.75% 3 120,000 0 1980 1991 2000 2010 2020f Population of Putrajaya District : 13.94% 6 0 1,600,000 1980 1991 2000 2010 2020f Population of Ulu Langat District : 6.38% 80,000 40,000 3 1,200,000 800,000 400,000 0 1991 2000 2010 2020f Source: Population and Housing Census, Department of Statistics 4 0 1980 1991 2000 2010 2020f

Highways in Greater KL

Rail Lines in Greater KL

Commercial Shops in Greater KL Commercial Shop unit supply in Greater KL 2005 114,467 units 2005 2010 supply growth 6.1% p.a. 2010 2015 supply growth 2.8% p.a. Transaction of Commercial Shops in Greater KL 7,000 6,302 units 6,160 units 6,000 5,310 units 5,000 4,000 4,416 units 3,877 units 3,519 units 3,000 2,000 1,000 0 2010 2011 2012 2013 2014 2015

Value of Commercial Shops in Greater KL Source: Savills Research Price per sq ft, 2015 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - RM744psf Dataran Sunway (3- storey) RM885psf SS 2 (3- storey) RM459psf Bandar Puchong Jaya (3.5- storey) RM413psf Bdr Puteri (4-storey) RM592psf Desa Sri Hartamas (4- storey) RM364psf Tmn Maluri (4-storey) RM1,859psf Bangsar Baru (2- storey) RM979psf Damansara Uptown (3.5- store) RM900psf Midvalley Boulevard (Stratified lot) RM868psf Phileo Damansara (Stratified lot) RM493psf Sunway Mentari (3- storey) 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 18.9% 9.0% Dataran Sunway (3- storey) 0.9% 9.7% SS 2 (3- storey) 2004/2005 to 2010 2010 to 2014/2015 16.4% 14.2% 14.32% 12.1% 12.4% 11.6% 9.5% 8.5% 9.11% Bandar Puchong Jaya (3.5- storey) 5.1% Bdr Puteri (4-storey) 3.1% Desa Sri Hartamas (4- storey) Price Growth 4.2% Tmn Maluri (4-storey) 4.0% Bangsar Baru (2- storey) Damansara Uptown (3.5- store) 3.9% Midvalley Boulevard (Stratified lot) 9.25% 8.34% Phileo Damansara (Stratified lot) 6.2% Sunway Mentari (3- storey)

Dataran Sunway (3-storey) Commercial Shops in Greater KL 2004 819,983-2010 2,320,000 18.93% 2015 3,570,000 9.00% Damansara Uptown (3.5-storey) SS 2 (3-storey) 2004 1,548,333-2010 2,612,000 9.11% 2015 5,100,000* 14.32% 2004 2,800,000* - 2010 2,980,000* 1.04% 2014 4,250,000* 9.28% Desa Sri Hartamas (4-storey) Source: Savills Research 2005 2,185,000* - 2010 3,433,333 9.46% 2015 4,000,000* 3.10% Tmn Maluri (4-storey) 2005 850,889-2010 1,052,917 4.35% 2015 2,221,000 16.10% Bangsar Baru (2-storey) 2005 2,700,000* - 2010 5,125,000* 13.68% 2015 6,380,000* 4.48% Sunway Mentari (3-storey) 2008 1,257,500-2010 1,850,000* 21.29% 2015 2,500,000 6.21% * Less than 3 transactions Bdr Puteri (4-storey) 2004 1,183,333-2010 2,379,800 12.35% 2015 3,050,000 5.09% Bandar Puchong Jaya (3.5-storey) 2004 920,500* - 2010 1,471,500 8.13% 2015 2,705,714 12.95%

Price Growth Comparison Commercial Shop, Condominium & Terrace Houses SS2, Petaling Jaya Kota Damansara 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 2004-2010 2010-2015 12.10% 6.30% 15.70% 5.80% 11.10% 8.60% 20.00% 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 2004-2010 2010-2015 18.10% 5.80% 10.10% 5.90% 12.20% 0.00% 2-storey Shop Condo Jasmine Tower 2-storey Terrace 0.00% Shoplot - Dataran Sunway Condo Casa Indah 2-storey Terrace

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Rental Index Price Index 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Rental Index Rental Index Prime Benchmark Commercial & Residential Prime office rent is on the rise, and dropped marginally Y-o-Y due to tenants movement. Prime retail rents reached its peak with Suria KLCC topping the list at RM200 psf. 150 Prime Office Rental Index (2005=100) 200 Prime Retail Rental Index (2005 = 100) 140 130 120 110 180 160 140 120 100 100 The average condominium rents in KL is trending downhill, and this shows that the competition is intense. 120.0 110.0 100.0 90.0 Condominium Rental Index (2005=100) The average condominium prices is rising, and this signified an owner occupying market. 180.0 160.0 140.0 120.0 Condominium Price Index (2005=100) 80.0 100.0

Highways in Greater KL

Rail Lines in Greater KL

THANK YOU Savills Malaysia